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August 4, 2022

Earnings Recap: ABNB, SPT, FSR, AXNX, ARIS

Earnings Recap: ABNB, SPT, FSR, AXNX, ARIS

Airbnb (ABNB) reported Q2 results that missed on the top line and beat on the bottom line. Revenue grew 56.7% to $2.1 billion while EPS of $0.56 beat by $0.13. Investors focused on a lighter-than-expected gross bookings figure ($17 billion, up 27%, versus expectations of $17.1 billion). This is one of those companies where everybody has an opinion, and they are all over the map. Some want Airbnb to fail. Some love it. My take is that it will succeed and will continue to evolve over the years. In 20 years Airbnb may be as different as Amazon was two decades after being founded. In the nearer term, I expect Airbnb’s business will continue to decelerate as travelers become more comfortable with hotels again and don’t feel the need/aren’t able to book stays as long as they could during the pandemic. Some of this could be offset by growth in properties on the platform. But I also think hosts have been able to raise prices over the last two years and that trend is dead – prices will likely flatten out or even go down some in some areas. On the flip side, Airbnb’s business is likely to be more than 70% larger in 2022 than it was in 2019, and it’s likely to be profitable moving forward. The company is not universally loved, and analysts are generally not too excited about it. I think it’s a good time to buy. Shares rebounded after being down following the report, and while I’m not expecting them to race to 150 this month (it will take some work to get through 125), I think they can get back near resistance around 130-135 in the next two months. Time to average down. BUY SECOND HALF

Sprout Social (SPT) beat Q2 expectations on the top and bottom lines. Revenue grew 37.4% to $61.4 million (beat by $1.09 million) while EPS of -$0.04 beat by $0.02. Full-year guidance of $253.9 - $254 million is slightly above $252.7 million and implies growth of over 35%. Management did a good job on the conference call of explaining how social media management is a different market than paid advertising (which is currently VERY lumpy) and often represents a channel where companies have more of a mission-critical view since managing social encompasses a lot of organic user traffic/growth. Bottom line, this was another good quarter, and while it probably won’t send SPT soaring, it helps confirm that the business is doing well. Maintaining at HOLD but considering an upgrade pending stock price momentum. HOLD

Fisker (FSR) reported Q2 results yesterday and confirmed that Ocean One production is set to begin November 17, 2022, and that all 5,000 pre-orders were reserved with $5,000 commitments, representing $350 million in potential revenue once all vehicles are delivered. The Fisker PEAR will be built at Foxconn’s facility in Ohio. The company has $852 million in cash, and management thinks this can get them through Ocean launch later this year, but it’s going to be tight. With an exciting launch now within sight and cash requirements going up we’ll keep at hold. HOLD

Axonics (AXNX) reported Q2 results above expectations, raised guidance and followed up the report with a secondary stock offering. Revenue grew by 50.3% to $69 million (beat by $8.95 million) while EPS of -$0.47 beat by $0.07. Full-year revenue guide increased to $253 million (+40%). A DTC television advertising campaign and launch of Axonics F15, as well as acquired Bulkamid business (+111% to $48 million in Q2) all helped propel growth. The stock should continue to do well, despite the offering. BUY

Aris Water (ARIS) is getting hit today after Q2 results showed revenue surpassed expectations but EPS whiffed. Revenue grew 34% to $76.4 million while EPS of $0.05 missed expectations of $0.24. The EPS miss appears to be due to abandoned well costs of $5.42 billion and management also talked about supply chain constraints and delays from contracted customers, with the impact likely to last through the end of the year. As an example, a delay with a frac crew on a four-well pad with 10,000 foot laterals requires 2 million barrels of water. With a $0.40 margin that’s $800,000 of pure gross profit. This is what’s happened in a few cases, and the business can’t just be replaced the next week. It will take into 2023. Aris also announced the acquisition of Delaware Energy’s assets, which include seven produced water handling facilities and gathering lines in New Mexico. Big picture, this quarter shows that Aris’ business is subject to some lumpiness, and while it should recover just fine, the “sting” will likely keep shares from getting back to all-time highs soon. It also doesn’t help that oil has fallen below $90 a barrel. Let’s move ARIS back to HOLD and give it a day or two to show us if it can rebound a little. HOLD